Paddy Dear – Principal Phil Bland – CFO David Wishnow – Principal Jeff Herlyn – Principal

Good afternoon. Thank you for joining Tetragon’s 2014 Q3 Report Investor Call. You are all in listen-only mode. The call will be accompanied by a live presentation, which can be viewed online by registering at the link provided in the company’s conference call press release. This press release can be found on the homepage of the company’s website, www.tetragoninv.com. In addition, questions can be submitted online, while watching the presentation. I will now turn you over to Paddy Dear to commence the presentation. Please go ahead.

Thank you. And as one of the Principals and Founders of Investment Manager of Tetragon Financial Group Limited, I’d like to welcome you to all the investor call. We’ll focus on the company’s third quarter results; give an overview of Equitix, the business we entered into an agreement last month to acquire, subject to FCA approval and other conditions. I will provide the overview and review of Equitix. Philip Bland, our CFO, will cover the company’s financials. Then David Wishnow, Jeff Herlyn, and I will cover the company’s investment portfolio and the asset management business. We’ll be taking questions electronically by our web-based system at the end of the presentation, as well as answering any questions that we’ve received since the last update. I would like to remind everyone that the following may contain forward-looking comments, including statements regarding intentions, beliefs or current expectations concerning performance and the financial condition on the products and markets in which Tetragon invests, and our performance may change materially as a result of various possible events or factors. By way of reminder, Tetragon owns approximately $1.8 billion of NAV, mainly in financial assets, but including certain operating asset management businesses, which collectively we call, TFG Asset Management. These asset managers at the end of Q3 had $10.6 billion of assets under management. Moving on to the investment strategy, I’ll remind everyone that TFG’s investment strategy differs from that of many other investment companies. We seek to our identity attractive assets and asset classes. We seek superior asset managers, and we seek to negotiate favorable terms for our investments, plus we seek to own some or all of the asset managers, plus the company’s revenues with a combination of asset returns and fee income from the asset management businesses. On Slide 5 here shows a schematic of what I’ve just described. And you will see that we’ve recently expanded this with two new businesses on the asset management side, albeit, in very different asset classes and a very different stages of evolution. First, in September, the company announced that it would be forming a new business, focused on mining finance, and we discussed this at the company’s Investor Day. The slides that we used on that day are available at the TFG website, so I don’t plan to go through that again today. However, I would note that this is a start-up business. We’re planning to long-term rewards, and now we do not expect any material profitability or fee income in the near future from this business to TFG Asset Management. Obviously as we make investments, we will expect returns on those investments. Second, TFG announced recently the entry into definitive agreements for the acquisition of Equitix Holdings Limited, a U.K. infrastructure asset management business. We’re excited about this acquisition, and I think now is an appropriate moment to go into more details of the company and the deal itself. Equitix is a fully integrated U.K. infrastructure fund manager and primary project platform. Equitix works with partners to help identify, develop, deliver and manage infrastructure projects. And Equitix is an integrated business model that provides proprietary access to investments, and the idea is to deliver annuity-like government-backed cash flows for both Equitix shareholders and the LPs. And later on in the presentation, I’ll refer back to a slide I used on the Investor Day, showing how we look at adding new businesses and why we think Equitix fits that model. But moving onto Slide 7, this chart shows the asset growth for the Equitix funds. And in answering a particular question that we had, these assets are the equity in the funds, so they’re not the value of the asset, but the equity raised by the various funds. The business was started back in 2007 by three principals, backed by private equity sponsor. The principals still run the business today and that was very much about thinking in the deal to ensure that they continue to run the business with their broader team. As you can see, there has been steady growth in assets and there has been, although not shown here, commensurate growth in the primary business. What it’s showing here is the asset growth, and obviously in the table there you can see the material historical events with three core infrastructure funds; Funds I & II, which are fully invested, Fund III, which is being invested currently and should be completed investment next year. And these are generally 25-year infrastructure funds. In addition, Equitix has what they call an, NDEE Fund, a non-domestic energy efficiency fund, which is getting exposure to that growing segment in the U.K. Slide 8 shows very attractive pictures of the Equitix team. The three founders all came from the industry. They had experience in construction, property management, property finance, and as you can see from the slide, they’ve built a team of 58 professionals across their business. So moving on to Slide 9. This schematic is designed to show the meaning of the integrated platform, and it shows, if you like, the hypothetical lifecycle of an infrastructure asset and where Equitix gets involved. On the left hand side, you have the primary business, which is mainly about creating the assets. So knowing what’s coming to market, building the consortia getting consorted together negotiating with government and local authority, managing the project, and it could be anything therefore from two to six years’ worth of work. On the right hand side, you have the more traditional asset management side of the business. And perhaps, this is sort of the better understood side of infrastructure asset management, buying the asset, holding it in the funds and managing it over the life of the asset for the benefit of the fund LPs, generally looking to enhance returns for efficient management and operation on financial efficiencies at the fund level. As I said, these tend to be generally 25-year assets and 25-year funds. So how does this transfer into revenues while using the sign, sort of, timeline you can see on the left hand side, looking at the primary management. It’s a bit of successful. It tends to have the bid costs paid back plus some element of success fees. And plus, if warranted, there is a premium income derived from the uplift in value created by derisking the project over that development phase of, let’s say, from two to six years. On the right hand side, these tend to be the more traditional fund management revenues, and furthermore typical asset management fees, namely fee income, typically at 1% per annum management fee, and typically performance fees of 20% over a 7.5% yield hurdle. And third, if anyone has the returns of any co-investment income. Next slide is more about the industry itself and what we expect. Certainly we and the Equitix management team, both believe, that there is a strong likelihood of continued growth in the infrastructure projects needing to be delivered in the U.K. And you can see on this slide, little bit of breakdown and some expectations. It also shows the breadth of the core domestic projects that Equitix is likely to be involved in and some thought on their projected growth. Equitix tends to focus on the mid-sized projects. They’re looking to limit their demand risk and maximize the security of income, plus also, as I mentioned earlier, on the energy efficiency side, they have some degree of first mover advantage with their funds in the U.K. Slide 12 is set-up to explain why the Equitix team, like to involve early in infrastructure projects, that really talks about the potential for return versus the amount of risk that one is taking in the project. In general, the earlier the involvement, not surprisingly the greater the risks, but also potentially the greater returns, hence Equitix would like to be involved early. Furthermore, we believe that early involvement creates a deeper understanding of the assets themselves, and that in turn, that may lead to better long-term returns and longer term management. This next slide talks about strategic rational from Tetragon’s perspective. And I won’t read through each bullet here, but in summary, we believe that Equitix fits well into our business that wanted to own assets and superior asset managers. We believe the asset class is attractive in growing as I’ve just touched on. We expect good returns from the assets themselves, and we expect good returns from the asset management business. And hopefully, we believe what we believe and hopefully we bought Equitix at a good entry price. Now as I said earlier, I was going to refer back to a slide I used at the Investor Day, which is this one. Talks about how we think about entering into new asset classes and new businesses. And I hope you could see from the previous half a dozen slides or so, why we like the Equitix business. It delivers on many of those core objectives. But what I’ve shown back in September was, let me look at an asset class, do we think it has good risk adjusted returns? And I thought a little bit here about why we think infrastructure assets do have the potential to be very good risk-adjusted returns if you can access government-backed long duration assets with yields in high-single or low-double-digits. The next question then is, do we believe those returns are likely to be sustainable? So is that Alpha, if you like, sustainable? Again, we believe so. There is a large amount of new infrastructure to be built, and with current low interest rates, logically this should continue. Although obviously there is no guarantee and obviously politics are a large factor in this, but we certainly believe so. Can we find a high-quality management team? Well, we definitely believe so. We started negotiations about seven or eight months ago. And so, not only have we looked a lot of the track record of the team, but we’ve had firsthand experience for the last seven or eight months, and we certainly believe we have a very good management team, who can grow the business with us. And then obviously, if that is the case, how can we set about negotiating a deal that will be worth both well for Equitix management, their LPs and for Tetragon. We believe we have done that and obviously that’s a very important part of the process. And with that makes sense to move onto the next slide, where we give a little bit of detail on the review of the financial aspects of the deal. So the purchase price, as we said in our press release, based on an enterprise value for the company of £159.5 million. And this figure will adjust depending on the actual close date and that in turn is dependent on FCA approval and one or two other conditions as we mentioned. Potentially in addition, there are certain post-closing increases to the purchase price that could be up to a maximum of £15 million, and that would be payable in early 2017. And they are based on the extent, by which, the company outperforms its current business plan. Now on the third bullet point, I’d like to talk a little bit about the assumed capital structure for the acquisition. We’re seeking £65 million of secured financing at the Equitix level. So that would be firstly, debt. And our preference is for external debt, and we’re in discussions at the moment and hoping to achieve that. All of the rest, so let’s say about £95 million of purchase price. Approximately £94 million, i.e. the vast majority, call it 98% or so, I’d expect it to be funded with loan notes with 12% coupon, of which, 15% will be acquired by the existing Equitix management team and 85% will be acquired by TFG. And TFG will use its balance sheet cash to fund that portion. The balance of the purchase price, which obviously as you can tell us from those numbers, is around about £1 million less. It’s the straight equity and that only kicks in once the repayment of the loan notes was happened. Once that happen, Equitix management are expected to own approximately 25.2% of the equity and TFG to own approximately 74.8% of the equity. So in essence, while the loan notes are being paid back, Tetragon owns effectively 85% of the business. And once they have been paid back, Tetragon will own approximately 74.8% of the business. As we said in the press release, purchase price is approximately 5x management EBITDA forecasts for 2015. And thus, we believe that the expected return on equity to Tetragon should be high, given the purchase price, and especially if we achieve external debt at the company level. I’ll now hand over to Phil Bland, who’ll cover the Q3 financials.

Yes. Thanks very much indeed, Paddy. So again background to TFG’s business comments on Equitix, I’m going to focus on how the firm performed in the third quarter of 2014, and also year-to-date. And I’m going to look initially at our key metrics, and then review the statement of operations. And also include some initial financial data on Equitix at the end of my section. As on past calls, I’m going to be using some non-GAAP as well as GAAP measures to financial performance, and we think these measures are helpful in better understanding the company. And for both definitions and reconciliations of GAAP measures, please take a look at the recently published quarterly performance report. So as you see from this first slide, we continue to focus on three key metrics for the Tetragon business. Earnings, we look at both ROE and earnings per share, measuring the operating performance of the company. We look at net asset value per share, reflecting how value is being accumulated within the business for investors. And then finally, we look at distributions and our future dividends, reflecting how value is being returned to shareholders. So let’s start by recapping on ROE. And here we define ROE as net economic income for the year divided by capital at the start of the year. So this is clearly a measure of earnings after all fees and expenses. The Q3 2014 ROE is annualizing at 6.9%. So that’s down from 10.5% at the end of Q1 and 9.5% at the end of Q2. So if you look below our long-term target range of 10% to 15% currently. Expressed in terms of our second earnings – major earnings per share, that equated to $0.98 on a year-to-date basis. Let me now look at some of the key drivers of our year-to-date performance by reviewing a breakdown of the EPS. And you’ll see in more detail tables this in our quarterly performance report, but here I’ve grouped things together in the same way that I did in the recent Annual Investor Day. And we think that the EPS analysis is a good way of reviewing the contribution made by the different components, particularly of the investment portfolio. Despite the low value of our total holdings in U.S. CLOs, which will be covered in more detail later, the performance for both U.S. CLO 1.0 and the U.S. CLO 2.0 has actually improved, compared to comparative period in 2013. And that performance is being boosted by among other things, gains on sales in recent months. Since the European CLOs, the further recalibration in the third quarter discount rates used in determining the fair value of the European CLO portfolio, from 14% to 13%, largely reflecting lower observed risk premia, added approximately $0.04 of the EPS. Turning to the other asset classes, after a strong start to the year, the equity-related returns, held both indirectly via Polygon funds and directly on TFG’s balance sheet, have experienced a pretty volatile and negative past few months. As a result, the Other Equities, Credit, Convertibles and Distressed category, lost approximately $16.6 million or $0.18 of EPS in the quarter. That said, despite market volatility, TFG’s exposure to convertible bonds and distressed credit via Polgon funds has held up pretty well, adding small net gains during Q3 2014. I’ll cover the TFG Asset Management performance in more detail later, so we’ll get back, but just focusing on the corporate expense side of things. A lower year-to-date performance fee accrual has contributing towards reduction in overall expenses on comparative basis. Let’s turn to our next key metric, which is pro forma fully diluted NAV per share, I’ll use NAV per share just short-hand. This fell slightly in Q3 and in the quarter at $16.82, down from the $17.08 at the end of first half. This is obviously a measure of the value that’s being built and retained within the firm, and is therefore do that thing dividends paid out just cash. So the majority of the decrease in the quarter was due to the payments of the Q2 2014 dividends of $0.155 per share. There was also a diluted impact of the accounting – as a result of the accounting treatment for the Investment Manager IPO options, and also investment performance was a minor drag on NAV per share. I’ve alluded to the calculation of the Investment Manager IPO options in the Q&A section as well. Turning now to our next metric. Let’s have a look at how TFG has returned value to shareholders in the form of dividends. TFG continues to pursue a progressive dividend policy, as you can see from the upwards trend in the graph, with a target payout ratio within a range of 30% to 50% of normalized earnings, recognizing that our long-term sustainable ROE target continues to be 10% to 15% per annum. TFG’s Q3 dividends of $0.155 per share brought the trailing 12 months dividends to $0.61, a 10.9% increase over comparable period to Q3 2013. Life-to-date dividends since IPO has now grown to $3.285 per share. The next slide looks at the U.S. GAAP statement of operations. And I’ve covered a number of the key trends when considering the EPS table. As a quick reminder, I think we have already looked at the different categories of business. Our CLO performance matched to both the interest income line, which as you can see, is somewhat trending down, but that’s offset by gains from investments further down the statement of operations, since these other balance sheet investments back entirely to the net gains from investment section of the statement of operations. TFG Asset Management’s growing contribution matches firmly to the other three income categories, which we’ll review in detail in a moment. So now let’s look at that statement of operations split by business segments. Looking at consolidation of LCM, Polygon and related management fee income, we can see that the TFG Asset Management segment has generated $20.9 million of net economic income before tax. So that’s a growing percentage and that equates to 21% of the total net economic income of TFG as a whole. Focusing now on the TFG Asset Management segments entirely. Through Q3 2014, the segment generated an EBITDA equivalent of $23.4 million, up over 27% compared with the same period last year. Notably the third-party fee pay income has grown by over 15% year-on-year, while net costs have grown at a slower pace net income overall. In the next couple of slides, we’re going to focus on two further topics relating to the TFG Asset Management segment. In this first slide, I’ll highlight the relatively low balance sheet value of TFGAM, as we recorded for U.S. GAAP purposes. And it’s just $91.5 million or approximately 5% of the TFG’s overall NAV. And again we just looked at TFGAM contributing 21% of net economic income. $34.1 of the balance sheet value relates to the fair value of TFG’s 23% holding in GreenOak Real Estate. And that’s generated a gain of around 88% of $15.9 million in the last 12 months, and its improving operating performance has set into a recalibration of its fair value. $57.4 million relates to the U.S. GAAP value of the remaining TFGAM businesses, which together generated $32.5 million of EBITDA in the last 12 months. Specifically within that number, LCM is valued at zero, so the majority of the value is relating to the Polygon part of the business. Paddy mentioned earlier both the Equitix transaction value and the expected external debt. So let’s have a look at how Equitix on a kind of pro forma basis, would affect the results of the TFG Asset Management segment. Assuming as we are closed in early 2015, we’d expect to see approximately $138 million of net balance sheet impact relating to Equitix being added into TFGAM, giving a total U.S. GAAP balance sheet value of approximately $229 million on a pro forma basis. This would equate to around 12.7% of the existing TFG NAV to-date, or as of the end of the third quarter. So that’s 5.1% that is currently the case for TFG Asset Management pre-Equitix. The second graph on this slide considers the earnings or economic value added implications. Using the 5x EV to management’s estimated EBITDA multiple that Paddy has already alluded to, Equitix potentially adds around $43.5 million of EBITDA in 2015 and that equates to around 90% of the economic value added by TFGAM as a whole in the last four quarters. So you can see the Equitix transaction really does move the needle significantly with its business segment within TFG. Equitix also adds materially to the scale of TFGAM in terms of AUM, which will grow by around 17% based on current AUM metrics. It also adds materially in terms of people, taking the combined headcounts on the platform, to an excess of 190 people. So there will be more on the asset management segments from Paddy later. And with that, I’ll pass to Paddy, who is going to focus on TFG’s investment portfolio.

Thanks, Phil. And on Slide 28, we show the breakdown of assets in the portfolio, and compare this breakdown with the end of 2013. And you can see that as anticipated and by design, the investment portfolio continues to become more diversified and less concentrated in any one asset class. Indeed CLOs have now reduced to under half of the portfolio at 48%, compared to 52% at the end of the first half, and 62% at the end of 2013. We believe that the CLO market in general continue to be less attractive in terms of new issue equity returns in the third quarter, and I’d exclude from that LCM deals, where obviously we may earn additional fee income. And in fact, Tetragon did not purchase any new CLO positions in the quarter. Instead, we did take advantage of market opportunities to sell or call some CLO positions. TFG continued to add to its investments in real estate vehicles, managed by GreenOak. TFG added to its investment in the Polygon managed, Distressed Fund, as anticipated. And at the end of Q3, TFG’s investible cash balance was $309 million. That’s approximately 17% of net assets. And obviously that’s at a slightly elevated level compared with past quarters, and that’s an anticipation of the planned Equitix acquisition. And I’ll talk a little bit more on uses of cash in a moment. But moving to Slide 29, this shows the NAV at the end of the quarter in each asset or asset class. And it shows the net income generated year-to-date. So in summary, CLOs performed well in the quarter, and Dave and Jeff, are going to give more details in a moment. As Phil has already gone through in the financial section, the Polygon Equity Fund had a weaker quarter, given the uncertain markets in Europe and in gold-related equities. The details of each fund performance were in figure 15 in the Q3 report. The Polygon Credit, Convertible and Distressed Funds continued their strong performance for the year-to-date, and again details by fund are in figure 15. And the Other Equity, Credit and CB category. This category lost money during the quarter. The vast majority of this category is currently invested in publicly quoted equities and these publicly quoted equities experienced the losses in Q3. Real estate continued to perform well, and during the quarter, TFG saw a significant amount of capital return from certain Japanese, U.S. and European investments reflecting some profitable sales with the underlying assets. I’ll now turnover, as I said to, David, who will discuss the CLO portfolio in more detail.

Thanks, Paddy. Corporate loan exposure continues to be TFG’s largest asset class in the investment portfolio, totaling approximately $887 million, and primarily owned through CLO equity. Of this CLO activity exposure, approximately 77% is in U.S. broadly-syndicated senior secured loans, 7.4% is in U.S. middle-market senior secured loans and 15.6% in European senior secured loans. On the look-through basis, this represents indirect exposure of approximately $11.4 billion of underlying loan assets, down from approximately $12.6 billion in the previous quarter end. As of the end of Q3, TFG held 43 U.S. CLO 1.0 equity positions and one debt investment in a CLO 1.0 deal. During Q3, TFG sold one equity tranche investment in a U.S. CLO 1.0 transaction. When evaluating CLO equity disposition opportunities, we assess among other things, the deals’ expected future returns, as well as loan collateral-related risks and potential market value volatility upon liquidation. During the later stages of CLO 1.0’s lifecycle, exposure to underlying loan market prices tends to have a significant impact on equity performance. We carefully consider loan market liquidity and volatility when evaluating whether to sell, call or hold CLO 1.0 equity positions. As in prior quarters, TFG’s CLO 1.0 deals continue to deleverage, with several deals having substantially completed their wind downs in the quarter. As of end of Q3, TFG held 13 equity investments in U.S. CLO 2.0 deals, unchanged from the prior quarter. During October and not reflected in this quarterly report, TFG took a majority stake equity investment of $22.5 million in a new issue LCM-managed CLO, LCM 18. We continue to be opportunistic in the new issue CLO 2.0 market, but the arbitrage between underlying loan spreads and the cost of debt remains challenged. Given this, we are primarily focused on internally-managed CLO investments with LCM, where TFG can earn both, a risk-adjusted return on its capital and fees for managing the overall structure. Also of note, we refinanced two of our CLO 2.0 deals during the quarter. The resulting reduction in the CLOs financing cost should result in increased returns to the equity tranches. We continue to look for additional CLO 2.0 refinancing opportunities that in the present market CLO debt spreads are a bit wide to efficiently refinance our deals. As of the end of the quarter, TFG held equity investments in nine European CLOs, again unchanged from Q2. Similar to the U.S. CLO 1.0 deals, European CLOs continue to amortize during the quarter, though at a slower pace. In the future, we may look to sell additional European CLO investments or exercise optional redemption rights when appropriate, in order to maximize the company’s investment returns. In the near-term, we do not expect to make new issue investments in European CLOs, due to structural and market inefficiencies and macroeconomic headwinds. TFG’s direct loan portfolio remains stable in Q3 at $24.2 in fair value. There were no defaults in the quarter. As previously stated, we do not expect to allocate additional capital for the strategy, due to more attractive alternative uses of TFG’s funds. I’ll now turn the call over to, Jeff, who will provide a brief overview of the CLO market.

Thanks Dave. Both CLO liabilities and underlying loan spreads widened over the third quarter, albeit, at different times and at different paces, which contributed to an increase in volatility in the CLO arbitrage. It’s clear that much of the liability widening may be attributed to technical influences, such as, a record amount of CLO issuance and arguable restricted [ph] market by smaller, less-known managers and the pullback from the market by some large institutional buyers that may have been experiencing higher levels of withdrawals from fixed income clients. On the asset side, loan spread widening resulted due to both retail loan fund and institutional high yield fund outflows. The resulting CLO arbitrage remains at the low end of its range at a low double-digit level, producing an acceptable risk-adjusted return, when combined with the CLO manager management and performance fees. Some of this technical impact appears to be short-term, and as such, we expect the CLO arbitrage to remain volatile, as these technical factors potentially change course over the near-term. One aspect of the market that could have a longer lasting impact on CLOs in their components, are the recently released, Dodd-Frank Act risk-retention regulations. While market participants are still in the process of sorting out the full impact of these regulations, which are currently scheduled to be fully implemented in 2016, there is some indication that certain aspects of the rules could have a significant effect on the market. For example, the risk-retention rule is designed to demonstrate that manager interests are aligned with investors could jeopardize the staying power of smaller managers lacking to the capital resources to meet the at-or-low requirements. This may in turn reduce the total volume of CLO issuance, resulting in a decline in the supply of new CLO liabilities, all else being equal, and CLO liability spreads could tighten as a result. Meanwhile at the same time, we could experience a decline in demand for CLOs by underlying loan assets, which could pressure loan spreads to widen. Obviously should this happen, all else being equal, the CLO arbitrage could likely improve. Given the rules, potential negative impact on smaller CLO managers, we would expect a greater tiering of managers in terms of liability, pricing and deal execution capability. We believe that managers without significant capital resources may find it difficult to attract investors as the impending implementation of the new regulations in 2016, prompts CLO investors to save at a larger, better resource managers. With CLOs representing over 60% of the leverage loan market, any impact on the demand for CLOs, they have an impact on the underlying loan market. On the potential positive side, there’s an improved credit quality of new issuance loans as the lower demand for CLOs eliminates the margin of manager – borrower, sorry. On the potential negative side, is that CLO demand may make it more difficult for borrowers to refinance during down cycles, given the reduced pool of capital resulting from lower CLO demand. The new risk-retention regulations have the potential to influence the CLO market significantly. We continue to monitor these and other regulatory developments, and are optimistic, that we are well positioned to take advantage of some of the potential fallout. I’ll now return it back to Paddy.

Thanks Jeff. And as I return to looking at TFG Asset Management, you may find it useful to look at the current slide, which hopefully shows existing businesses plus the two new businesses that we discussed earlier. So let’s talk you through the financials for this part of the business for the quarter. So really just to give you some highlights and some summary, and if I go from left to right on this, Polygon’s assets under management, unchanged at $1.5 billion, but that is net of the distribution from Recovery Fund during the quarter, were slightly up in the other funds and details were in the Q3 report. Next from the left is LCM. CLO assets under management stood at approximately $4.9 billion. And although we didn’t issue any new CLOs in Q3, as David had just said, we did issue a new LCM CLO in October, so just after the close of the quarter. GreanOak. Assets now to approximately $4.2 billion and they have been successful in raising money for their Japan Fund, U.S. Funds and indeed European Funds. So that business continues to grow well. Fourth item to note, Mining Finance, which is we discussed as new startup business, so nothing to report. And the fifth is Equitix, which I covered earlier in the presentation. So now I’d like to move on to slide I’ve used in previous quarters, which gives some guidance as to expected future investments. Although, as I think you would expect the actual investments can and do vary substantially from this guidance, depending on the opportunities available. And as always one of the greatest unknown is the bottom section, which is new businesses and new asset classes. But starting from the top, the Equitix transaction will use between approximately $140 million and $240 million, depending on whether we get external debt funding. So that is a cash amount that’s coming off of the balance sheet. Second item down, CLO 1.0, obviously no money will be going into those. CLO 2.0, it depend ultimately on the arbitrage, but we’re assuming somewhere between $25 million and $100 million over the coming 12 months. I would expect that those are more likely to be an LCM deals, given that we get a better return than we do on third-party deals. European CLOs, as David said in his piece earlier, we haven’t written a new European CLOs post the crisis, and although we monitor that market closely, we don’t have any that we are anticipating to fund in the next 12 months. Direct Loans. We’ve been reducing that, as people who follow the company closely will know, and again don’t expect to put more capital into those in the near term. For the Polygon Funds, we have no current expectation, but obviously we’ll manage those exposures on an opportunistic basis. Other Equity, Credit and CB trades, these are on the balance sheet. There are no plans for current investments, but obviously it’s a very opportunistic part of the portfolio, and so that could change at any time. Real estate. We do expect to increase over the next 12 months our investments in GreenOak vehicles, potentially some new investments that become available, but also we expect to be drawing down on current commitments as they get invested. Mining Finance. Obviously, we expect to begin to build the business by making investments over coming 12 months. The size will absolutely depend on the quality and the deals that come our way. And infrastructure. This obviously applies to the Equitix transaction. We have the potential to invest in Equitix funds, albeit, close the gap over the next 12 months, we expect that, that is possible. The new business section. As always, there is nothing definitive, but we’re looking at a lots of new asset classes, lots of new businesses and some of these may or may not come to fruition in the next 12 months. I would note if you look through this as a chart that, if we were at the high-end of each of those ranges, obviously we don’t have enough cash to achieve all of those investments. And I don’t want people to go away with the impression that we’re therefore likely to shelf things on our balance sheet to fund those. As always, every investment is a function of multiple things, amongst which, are the expected return, the risk, the correlated risks to the existing portfolio, the duration of the asset, the liquidity of the asset, the blend of indeed growing an asset management business alongside the return of the investment itself. And so it is the mix of both that is going to ultimately determine how the capital is invested, and hence one should look at this very much as a guide rather than a forecast. And I think while I have this slide up, given that, that is the end of the presentation, it’s probably a good time to move straight into the Q&A, because one of the questions in particular refers to cash levels, so I think it’d be useful if people have the slide in front of them.

The question is as follows. Cash levels keep rising, “let’s assume further U.S. CLO rundown” Equitix may use further a $100 million of cash in the first quarter of 2015, but what is the plan for excess cash? Either further fund management acquisitions or share buyback? And the reason I wanted to keep this slide up is, I think that I see our cash slightly differently. As we said earlier in the presentation, we’ve put out – at the end of quarter we had about $309 million of free cash. And obviously, if we have to fund the full amount of Equitix of the balance sheet, which would be $240 million give or take, that would actually leave relatively short amount, probably $60 million, $70 million of cash available on the balance sheet. What is more likely we believe is we need to fund $140 million. And so that does give some freedom, but actually if you then start looking through the opportunities that we would like to invest in – obviously, we have some commitments already to real estate, but the likely commitment that we want to make to new issue CLOs and indeed to mining finance, not to mention the other pieces that I’ve run through here, you can see that we don’t consider ourselves to have excess cash. We have some freedom, but much less than we’ve had previously. And so I think that’s how I would describe our cash situation at the moment. A second question coming up. Touch on here is, one for Phil, and maybe he alluded to it earlier. So I’ll give him the – it reads as follows. The net asset value per share decline appears driven by the dilutionary impact of management share options. Can you please explain how these options are accounted for, and what is the approximate sensitivity that the share price rises in $1 steps above the $10 strike price?

Sure. Okay, thanks Paddy. Yes, so the first thing to say is that these are options granted to the Manager IPO, which is why price of $10. So we anticipate that they will be net settled in the future. And so what we consider is, to what extent is the share price of TFG sitting above $10 and what would be the equivalent share dilution arousing from that value above $10 per share. Now, some of you who participated in our Annual Investor Day will recall that I have provided a slide deck, which gives you the dilution in terms of the number of shares at share price of $10. If there is no dilution, $11, $12, $13. But to give you hopefully a useful and easy reference point, the share price, just before we came into the call today is approximately $10.40. As the share price increased by $1 to $11.40, this would reduce NAV per share by approximately $0.17. So that gives you a sense of the sensitivity. I would encourage people just to look back to our Investor Day presentation as well.

Thank you, Phil. We have two questions on the debt financing or potential debt financing that we’re looking for the Equitix transaction. And hopefully I’ve gone through – I tried to go through that when the slides were there to ensure that those were answered. So I’m going to dwell on those further, but if by any chance I haven’t answered those, please come back to me after the call. I have a question here on the fund management platform growth, and it reads as follows. Are you able to give us a target AUM number you’re heading towards over the next two years, split between organic growth and inorganic growth? The simple answer to the question is, no, we don’t have a target for AUM growth overall. Each of the underlying businesses is in asset raising mode. And so if you think about just having us sort of give or take $12 billion currently including the Equitix transaction, we would expect reasonable organic growth in 2015. But the simple answer to the question is we don’t have a target growth for the overall business. Another question here is, can you explain the liquidity of the stock on the exchange? And maybe I’ll hand over to David to answer that one.

Thanks Paddy. In regards to the liquidity of the shares, we get a fair amount of questions and queries from investors on this topic. The actual amount of shares that trade on the Euronext exchange is fairly small to the overall average daily trading volume. For example, during Q3, the average daily trading volume was approximately 200,000 shares a day, and only 25% of those shares traded on exchange on Euronext. So conversely 75% traded over-the-counter. The two exchanges where the majority of that over-the-counter trade occurred were the BAS [ph] Europe OTC market and the London OTC market. Now in Q2, we also saw a similar breakdown, whereby approximately 55% of share trading occurred off the Euronext exchange. So again through BAS [ph] or London. So there is more liquidity I think than one would suggest, and most of the larger block trades tend to happen or trade-off exchange off the Euronext exchange.

Thank you, David. Next one is, are you able to discuss the incentive fee potential of the existing Equitix funds? What percentage of those fees will the shareholders of Tetragon receive? And I guess it’s part two to the question. One year from today, what percent of the firm’s AUM, do you believe will be in CLOs? Okay, so these are obviously two very different questions. So the first question to reiterate is, what is the incentive fee potential of the existing Equitix funds, and what percentage of those fees will accrue to the shareholders of Tetragon? So in general, the Equitix Infrastructure Funds, 25-year funds, that has an incentive fee of 20% over the 7.5% yield hurdle. In those types of funds, it takes a few years to run past the yield, and so you don’t expect to achieve that yield in the early years. If you do a good job and you exceed that, you would expect to exceed it and hope to remain above it for the later years. So we believe that in future years, there is significant potential from performance of fees, from obviously the existing funds, but also potentially hopefully from new funds raised as well. But I do stress that the long-term funds, the long-term assets and it will be accrued over time, we’re not factoring material performance fees into next year’s earnings, for example. Of those performance fees, a percentage of the fees accrue directly to the Equitix team involved in those funds. So just like any other asset management business, we want to carve out a section of those performance fees to go to the people that are delivering that performance. But the residual, which is a majority of the performance fees reside with Equitix, the company. And Tetragon in the longer term owns 74.8% under the current structure of that equity, and that’s when we receive 74.8% of the net of any payouts for team performance fees that reside with the company. Second part of the question is, one year from today, what percent of the firm’s AUM do you believe will be in CLOs? And I think the easiest way to answer that is we do not give an explicit forecast because the two parts to do that analysis, and one is, what’s happening to the existing part of the portfolio and how fast is it declining. And the second part of the equation is, how many new CLOs are we putting onto the portfolio. And both of those are determined very much by the market, as much as other things. But I think obviously that I can make a few statements that hopefully will make it clear for people. The CLO 1.0s are amortizing and obviously at certain point in life, there won’t be any of them. We can accelerate those, as indeed we did in third quarter, by either selling or calling deals, and that is that kind of normal market prices and opportunities set in what we think are likely returns are. So it’s very difficult to predict what we would do, but even if we do nothing, over time the CLO 1.0 portfolio will go to zero. So that will continue to decline throughout 2015. Whether we chose to accelerate it or not, will depend on market opportunities. Looking at the other side of the equation, as you can see from my use of the cash slide, we’re assuming between $25 million and $75 million or $25 million up to possibly $100 million of investments in new CLO equity. And as you have seen from the current year, it does depend very much on where we see the arbitrage at any given time. And that varies week-to-week and month-to-month. So we’re trying to give you some sort of guidance to how we want to be building new CLOs, and we’re very much in principal investors for the long-term in CLO equity, but it’s very difficult to give a precise forecast for the next 12 months, given the take rates [ph] of the market and given the expected IRRs that change day-to-day as we go through the market. But hopefully, explaining those two thoughts on what’s in the portfolio currently and how it amortizes, and how we think about making new investments, gives some degree of calculation that people can do for themselves. The next question I have here is, please explain the 12% note in the Equitix transaction? Is TFG borrowing that from Equitix seller? The answer to second is absolutely not. TFG is not borrowing any money. TFG is putting its cash. It’s giving cash to the seller. The seller is getting a £159.5 million or any variance on that, but roughly £160 million. That is what the seller is receiving. Of that, we’re trying to get debt as we said of £65 million. The loan notes are Tetragon and the existing Equitix management team, are putting their shareholder loans to fund the purchase of the company. So the cash is going to the seller, but the owner, i.e., the Equitix management team and TFG team own loan notes and their shareholder loan notes. And then after that, is the equity. And the equity is owned roughly 25% by management and 75% by Tetragon. The reason we’re structuring it that way, is we want management firstly to have 15% of the current business, but we want them to have a larger chunk of the business, one certain amounts of cash have been paid back. So the better the business does, the more equity we want management to have. So if you think about it, if we do have £65 million of debt, then as the loan notes are paid back, Tetragon receives 85% of those cash flows as the loan notes are paid back. Once they are fully repaid, then Tetragon receives approximately 75% of the distributions thereafter. And the reciprocal of that is that management for the first cash flows, while the loan note is being paid back, receives 15%. And thereafter, so a few years down the road hopefully when those loan notes are being paid back, management will step up from 15% to 25% of the business and that is the incentive for creating a valuable business staying on and obviously creating value for the longer term, as they get an increasing chunk of the business, the better it does. So that’s why we structured the purchase with loan notes. And I think that with just under the hour, but that does bring us to the end of questions. So I would thank everyone for staying with us. As always, thank you for time. And I look forward to speak to you in the coming weeks and months.

That does conclude our conference for today. Thank you for participating. You may all disconnect. Speakers please standby.